Indonesia’s Rupiah Steady as Bond Demand Offsets Share Sell-Off
February 08, 2012, 8:19 PM ESTBy Khalid Qayum
Feb. 8 (Bloomberg) -- Indonesia’s rupiah was steady as demand for the nation’s sovereign debt offset foreign funds pulling money from local stocks.
The country sold 12 trillion rupiah ($1.3 billion) of local-currency bonds yesterday, exceeding its 8 trillion rupiah target, the finance ministry said in a statement. The sale drew 42.38 trillion rupiah of bids, it said. Overseas investors sold $120 million more local shares than they bought in the first two days of this week, exchange data show. Gross domestic product rose 6.46 percent in 2011, after a revised 6.20 percent gain the previous year, the statistics bureau said this week.
“Demand for government bonds was much more than the target as foreigners participated in the sale,” said Bambang Eko Joewono, the Jakarta-based head of the global-markets division at PT Bank UOB Indonesia. “Investors are attracted to the strong economic fundamentals of Indonesia.”
The rupiah traded at 8,989 per dollar as of 9:35 a.m. in Jakarta, from 8,990 yesterday, according to prices from local banks compiled by Bloomberg. The currency rose as much as 0.1 percent to 8,980 earlier.
Moody’s Investors Service awarded Indonesia an investment- grade credit rating last month, following Fitch Ratings in December. Offshore funds boosted holdings of Indonesian government debt by 5.6 percent to 235.3 trillion rupiah this year through Feb. 6, according to finance ministry data.
The yield on the government’s 7 percent bond due May 2022 fell two basis points, or 0.02 percentage point, to 5.25 percent yesterday, according to the Inter-Dealer Market Association. It was the ninth day in a row the rate has dropped.
--Editors: Andrew Janes, Ven Ram
To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
